September 30, 2014

Low Prices Convince Brazilians to Hold Onto Their Corn

Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.

Farmers in Brazil continue to be slow sellers of their recently harvested corn as they wait for improved prices. Domestic corn prices last week illustrates the problem in Brazil of high transportation cost incurred when moving the corn from the interior to export facilities. Below are the domestic corn prices last week at three cities in the interior of Brazil and at the Port of Paranagua.

In Sao Gabriel do Oeste in northern Mato Grosso do Sul corn was selling for R$ 15.20 per sack (approximately US$ 2.87 a bushel). In Jatai in Goias it was selling for R$ 16.30 per sack (approximately US$ 3.08 a bushel) and in Cascavel in Parana it was R$ 17.70 per sack (approximately US$ 3.35 a bushel). At the Port of Paranagua it was R$ 22.50 a sack or approximately US$ US$ 4.26 a bushel. These prices in dollars were calculated using an exchange rate of 2.4 Brazilian reals per dollar.

The difference between in price between Sao Gabriel do Oeste in Mato Grosso do Sul and the Port of Paranagua is US$ 1.40 a bushel or essentially the cost of transporting the corn. If you went still further in the interior to central Mato Grosso, the difference in price is even greater at approximately US$ 2.00 a bushel.

Corn exports from Brazil also continue to be slow. Thus far in 2014, Brazil has exported 7.3 million tons of corn compared to 11.8 million tons last year at this time. As a result, Brazil's corn exports are expected to fall far short of the 21 million tons estimated by Conab. Many market observers expect the Brazilian corn exports to be in the range of 15 to 17 million tons.